I agree re the risk. America very clearly won the trade war with...

I agree re the risk. America very clearly won the trade war with China, in spite of the Trump-hating media trying to portray it as a loss. That's because Trump was right when he said it would be easy because America imported a lot more from China than China from USA. Or was that just the opening battle of a longer war (like Dunkirk in WWII eg.)?

Maybe the trade war is now going into its second phase, with China picking off western nations one by one until the USA is left friendless? If so, then they are starting with Australia (as they said they would). China imports more from Australia than we from them, so this time it's easy for China to win. If our allies don't stand with us, we can't win (IMHO). Our major ally, America, will stand with us verbally, but what about those exports to China? We are competitors with America in many markets (we export the same stuff) and America will step in where we are forced out because they won't be able to stop their companies even if they wanted to (again IMHO).

Australia has a tough time ahead. China will keep turning the screws, and we, ie. our government, will have to stand firm or we have lost. That's the rule with bullies like Xi Jinping's China - if you cave in once then they don't stop until they have taken everything (that's how bullies operate - once you pay the Danegeld you never get rid of the Dane).

China is turning the screws on Hong Kong, they are turning the screws on the South China Sea, they are turning the screws on much of Africa. It's hard to see how Hong Kong can survive. American patrols in the South China Sea are a good show, but China keeps increasing its grip. China already has Darwin and Dan Andrews in its pocket, so we're already in a bit of trouble.

There's another feature of bullies, though, and that is that a lot of it is bluff. China is in a lot more strife now than it would ever want to admit. It's crucial that Australia keeps its nerve on the Wuhan virus enquiry: China's first objective is to kill the enquiry or to control it through the WHO, if they achieve that then they will be just that bit harder to stop on anything else. Then we have to keep our nerve on China exports. Sell the barley to someone else or plough it in. Cut coal and steel exports to China even if we can't sell to anyone else. That's a lot of pain, but if you want an idea of what the pain will be like if we cave in then just look at Tibet and Hong Kong.

Then we look for China's weaknesses so that we can actively fight back. Working with the USA and other nations to get Taiwan recognised as a sovereign nation might be a good first step, and if Donald Trump gets re-elected we might just get there. But China's main weakness is that it exports more around the world than it imports, and if America and the rest of the free world work on that then China's in trouble. Australia will get hurt along the way, but that's better than a chinese government in Canberra (or is that Melbourne?).

So, coming back to your statement about risk, I'm quite bearish on the Australian market in the near term, assuming that ScoMo keeps his nerve for a while at least, and am sitting on a high proportion of cash. But politics and the market are unpredictable, so I may well come unstuck. JMK said the market could stay irrational longer than you or I could stay solvent. We'll see.

PS. Please note that my BPT sentiment is unchanged.